Posts Tagged ‘emergency’

As I write this (ed. last week, of course), Hurricane Sandy is pounding down our door (read: causing some trees outside to sway slightly). Work has been cancelled; schools are shut down; public transportation is offline, and we’re holed up inside waiting to see if the hype was accurate. One would assume that in the face of an apocalyptic weather event where I am forced (yes, forced) to sleep in and stay inside all day without putting on real pants (leggings don’t count), staying within a budget would be simple. But there are a surprising number of ways to run through money in an event like today’s, and only some of them could be deemed “wasteful.”

I’ll start with pre-hurricane spending, which is no small thing. After reviewing our fridge contents and discovering that we were down to three kinds of cheese and one apple – I won’t judge you if you don’t judge me – I suggested to my husband that we get a few groceries before we were potentially trapped inside because of wind and rain. Unfortunately, the entirety of our small, liberal-minded city had the same idea, and so after waiting in line at Whole Foods for twenty minutes, we emerged many dollars poorer, but in possession of a few non-perishables and other essentials (like beer).

But how can you spend money now that you’re trapped inside? In the internet age, it’s easy, and when you know you might not have internet for much longer, it’s even easier. Bills were paid instantly, because the power might go out. And what better way to procrastinate a morning away than by doing some online shopping? A few stores have even offered discounts in light of the hurricane (presumably because they cannot be open and they still want you to spend money), and I’ve taken advantage. And then there are the even more frivolous purchases; having discovered a way to rent videos on Amazon and stream them through our TV, my husband and I have a date with an easily rented (for the right amount of money, of course) movie or two today. Sure, we could watch what we have, but we rarely go to the movies, and we never get an unexpected day off. It’s worth the money, in my opinion.

In eight years, we have been extremely lucky in that we have never had to tap into our emergency fund. As such, it’s a been a while since I’ve actively thought about it. There’s a myriad of ways that our emergency fund helps us on our path to financial security. We see it as a form of self-insurance, in that it helps us to avoid financial catastrophe should an unplanned unfortunate event happen to us. Here’s some of the ways that we’re protected.

Income Replacement

We’ve both been happily employed at our jobs for eight years. While we’ve both had some scares of layoffs, we’ve both been lucky and have avoided cuts. We can’t always depend on luck to keep saving us, so we’ve built up a cash cushion to replace our income should we find ourselves unemployed. This is obviously the main use of an emergency fund, but it also has other, indirect uses.

Credit Score Protection

By having a cash supply to fall back on, we’d be able to pay our bills on time, even if that means we pay only the minimums. Credit scores are becoming increasingly important, not only for getting good rates on home or auto loans, but also for insurance rates and even to determine whether you get a job. Even paying one bill more than 30 days past the due date can have unforgivingly deliterious effects on credit scores. It would be such a bummer for one late payment to ruin years of building good credit. (By the way, we use Credit Karma to monitor our credit score – here’s our review of Credit Karma and you can sign up for Credit Karma here!)

Ability to Keep Moving Forward

If one of us were to lose our jobs, we would be job searching full-throttle in order to fill the income gap. Having an emergency fund would allow us to concentrate mostly on finding a new job that suited us, and not having to get a job in the meantime in order to make ends meet. This way, we can allocate all of our efforts into finding a long-term solution for employment, which in the long run will allow us to build our financial resources even further.

Ability to Seize Oppotunities

Once in a while, I like to imagine that I’d come across a business opportunity that I couldn’t pass up, but would be very risky. By having an emergency fund, I’d be able to pursue (with the ok of the spouse, of course) an opportunity knowing that the financial impact would be minimized. In realty, the best opportunities that have come up so far are fantastic sales that we couldn’t pass up. Either way, having the emergency fund allows us to take advantage of opportunities while minimizing our risk.

Peace of Mind

The most important asset that an emergency fund brings to us is peace of mind. Just knowing that we would be able to tackle life obstacles without major financial distractions allows us to sleep much more soundly at night. We already have a lot of stress on our plates and it is a relief that we don’t have to worry about what will happen should one of us lose our jobs.

Do you have an emergency fund? In what ways are you protected by having one?

Giveaway!

We’ve partnered up with SavingsAdvice.com to offer you the chance of winning $100 through PayPal or as an Amazon Giftcard. This is a great way to start or supplement an emergency fund. Entering is easy – all you have to do it like our Facebook Page. You can get additional entries by doing any of the other activities. That’s it! The contest is open until November 10. Good luck!

There are many benefits to our current situation, beyond the obvious points of no-rent and free food. The students here are genuinely interesting, intellectually engaged kids who are, by and large, well-behaved and very nice. There are times when I feel like a den-mother, asking nineteen-year-olds what kind of cookies they’d like at a study break, or how their roommate situation is going (My husband, Brad, try as he might, is not exceptional at navigating female housing conflicts).

And then there are moments when I remember that we do live with college students, smart and lovely though they may be. One of those moments was a few nights ago. After a totally normal evening, we had just gone to sleep when I heard shrieking in the hallway. Whatever, it’s college, it happens, I thought. And then there was the banging. The very insistent banging on our door. I turned to Brad, who falls asleep ten times faster than I do.

“Someone’s knocking on the door.”

“Huhwhat?”

“Get up, someone’s knocking on the door.”

“[inarticulate mumbling]”

And then I heard the fire alarm. While Brad stumbled around in the dark, looking for his glasses, I headed to our front door and poked my head out, to see what was going on. That’s when the very dense, acrid smoke hit, and I realized it might not be the usual shenanigans.

“THE HALLWAY IS FILLED WITH SMOKE, GET YOUR SHOES ON.”

While Brad glacially moved towards his sneakers (one thing I learned from this experience is that he is apparently not the crisis management in this relationship), I grabbed my phone and my purse, and we headed out the door and into the street. There, the girls who live on our floor explained that they had put a plastic tea kettle on the electric coil stove (WHAT? WHY?) and it had melted (WELL YES OBVIOUSLY IT MELTED). While Brad told them it was fine, and made sure they had turned off the stove before leaving (they had), I called the authorities, who sent over two trucks full of thoroughly annoyed looking firemen. They aired out the hallway, made sure the stove was safe, and after we gave all of the university authorities our information, they headed off into the night.

Despite the obvious questions this situation raised, like why these students thought it was a good idea to put plastic on a hot burner (for privacy purposes I won’t say which university we’re associated with, but I will say that if you’re smart enough to get into this school, you should be smart enough not to put a PLASTIC TEA KETTLE ON A BURNER), another was what we’d save, and what we’d lose, in a real emergency. The first item on my list is Brad – while watching him come out of his slumber more slowly than I’ve seen babies crawl across a football field, I realized that my hyper-anxiety at least enables me to be immediately on the alert in a situation like this, and to get him out the door and to safety as soon as possible. But after that? Well, I grabbed my phone because I figured we’d need it, and my bag because it was by the door. But that was it. (You might notice our cat is missing – he has the miserable habit of running very far under a variety of furniture when something scares him, and we’re trying to figure out how we could get him out of the building, if it came to that, without killing ourselves in the process.) But everything else is (maybe literally) toast. And in that moment, when I realized that our building might actually be on fire, that wasn’t even a concern. It’s a relief to know that my miserly ways don’t extend to those terrible moments of decision, when saving your money might mean losing what actually matters.

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